JOHANNESBURG — Warren Buffett, the oracle of Omaha, famously avoided the tech sector during the boom times. But since those days there’s one player that catches his eye, because ‘they make a consumer product he understands’. It’s Apple and the iPhone. And on the back of this Berkshire has upped its stake in the company to $46.6bn at the end of the second quarter, now the second largest shareholder behind the Vanguard Group with 4.96% of Apple stock. The technology giant won the US companies race being the first to touch the trillion dollar market cap level, and with Buffett’s backing, one wonders how long shareholders will have to wait for the next trillion. – Stuart Lowman
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Buffett’s Berkshire Keeps Buying More of Apple
(The Wall Street Journal) Warren Buffett’s Berkshire Hathaway Inc. BRK.B 0.32% continued to load up on technology giant Apple Inc. AAPL 0.42% in the second quarter.
Berkshire increased its holdings of Apple stock by 12.4 million shares in the quarter, taking its stake to $46.6 billion by the end of June, according to a new securities filing on Tuesday.
Mr. Buffett’s firm has largely avoided investing in the tech sector, even during a run-up in technology shares in recent years. One of the few exceptions has been Apple, which Mr. Buffett has said makes a consumer product he understands.
Berkshire has repeatedly added shares of the iPhone maker, including more than doubling its stake in early 2017. As of March 31, Berkshire was Apple’s second-largest shareholder after Vanguard Group, holding 4.96% of Apple stock.
In the second quarter, Berkshire also sold some shares in Wells Fargo & Co. while adding to its shares of Goldman Sachs Group Inc.
Berkshire prefers to keep most of its holdings under 10% to avoid increased regulatory requirements. This self-imposed limit caused it to adjust its holdings in the banking and airlines industries, the company said.
Berkshire sold 4.5 million shares of Wells Fargo in the second quarter and bought 2.3 million shares of Goldman Sachs. The firm also bought 9.9 million shares of U.S. Bancorp.
The firm adjusted its airline holdings in the quarter. It sharply increased its stakes in Delta Air Lines Inc. and Southwest Airlines Co., while reducing its ownership in American Airlines Group Inc. and United Continental Holdings.
Mr. Buffett famously derided investing in airline stocks after suffering initial losses from a foray into the former USAir Group Inc. Berkshire bought $358 million of preferred stock in USAir in 1989, but the investment lost value in subsequent years.
“I plunged into the business at almost the exact moment that it ran into severe problems,” Mr. Buffett wrote in his 1990 letter to shareholders.
Berkshire sold its stake “for a hefty gain” in 1998, Mr. Buffett wrote in his 2007 letter, but he said he still regretted the purchase.
“The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines,” he wrote.
Still, the airline industry got a vote of confidence from Mr. Buffett in 2016. Berkshire bought shares in all four airlines that year.
